The Indian economy remains strong relative to the rest of the world, despite the short-term impact of the government's move to demonetise high-value currency notes, according to Mark Weinberger, global chairman and chief executive officer of EY.
Speaking to BloombergQuint's Menaka Doshi on the sidelines of the World Economic Forum at Davos, Weinberger says the cash ban “in principle seems strong” but its implementation was disruptive, hurting especially the poor. The upcoming Union Budget must look at providing stimulus measures to alleviate some of the pain caused by the liquidity crunch, he adds.
In the U.S., he expects some sort of stimulus to come through once President Elect Donald Trump takes charge, either by way of deregulation, infrastructure spending, lower tax rates or even a different tax base. This will boost growth in the U.S., in turn pushing global growth higher. The risk of the higher dollar however, necessitates that the Trump administration be fiscally responsible, he says.
Highlighting the two big levers of Trump's proposed tax plan, he says, “The desire has been for a lower corporate tax rate and getting rid of many of the deduction and credits and other incentives that are in the code to make them more simple, to offset the cost of lowering the rate. and moving to a system like the rest of the world that taxes U.S. domestic companies on their domestic income and not tax them on their global income in addition to the foreign taxes that they already pay.”
The proposed 15 percent corporate tax rate will be tough should the U.S. government maintain fiscal prudence, but anything in the "the low 20s will make it competitive with the rest of the world especially if they change the tax base.”
Also Read: India's Note Ban Is ‘Highly Disruptive', Says IHS Markit Chief Economist
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